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Singapore to Let Banks Invest in E-Commerce, Other Business

(Bloomberg) -- Singapore regulators have proposed rules that will make it easier for banks to conduct or invest in non-financial businesses such as e-commerce and digital-payment platforms, helping them to better compete with non-bank firms in these areas, Finance Minister Heng Swee Keat said Tuesday.

Under the proposals, lenders will no longer need regulatory approval to invest in such businesses, Heng told the annual bankers’ dinner. The Monetary Authority of Singapore will cap the investment to 10 percent of the bank’s capital funds, the regulator said in a statement accompanying Heng’s speech.

“Banks are facing increasing competition from online and non-financial players that have leveraged their large user base to provide digital wallets, payments and remittance services,” Heng said. How the city state navigates the urgency for innovation, while maintaining the safety and soundness of its financial sector “will be crucial to our future,” he said.

Singapore’s proposals come as financial technology and e-commerce giants including Alibaba Group Holding Ltd. are expanding financial services including digital payments in Southeast Asia as part of their global strategy. Such companies “are in effect no different from banks,” DBS Group Holdings Ltd. Chief Executive Officer Piyush Gupta said at the same event.

“The logic is compelling,” Gupta said. “With the ubiquity of the smartphone, customers increasingly want banking to be seamlessly integrated into their daily lives. There are a number of areas where a banking service can be nicely integrated into e-commerce, and we welcome the opportunity to do so.”

Payments Network

As part of the banking industry’s drive for digital payments, consumers at seven major banks in the city state will be able to transfer Singapore dollars to one another almost immediately, using mobile phone numbers and national identification numbers and without knowing recipients’ account details, the Association of Banks in Singapore said Tuesday.

Banks will continue to be prohibited from entering certain businesses including property development and provision of hotel and resort facilities, MAS said. The regulator will provide details of the policy changes in a consultation paper to be released by the end of September.

“Existing financial services players have a huge opportunity now to provide avenues to spend and purchase goods and services from their platforms since they already have payment capabilities and customer relationships in place," said Varun Mittal, who leads the Southeast Asia financial technology team for Southeast Asia at the consultancy EY.